Crimea

Russia and Venezuela are two of many to be involved in the upcoming changes

In a documentary that aired recently on the Canadian Broadcasting Corporation’s popular The Fifth Estate program, an allegory of Vladimir Putin was presented. The wily Russian president was described growing up in a shabby St. Petersburg apartment, where he would often corner rats.

Now, punished by low oil prices and Western sanctions against Russian incursions in Ukraine/ Crimea, Putin is himself the cornered rat. Many wonder, and fear, what he will do if conditions in Russia become increasingly desperate.

In the last six months oil prices have plunged over 50 percent and the Russian economy is hurting. The country now faces slowing economic growth, a depressed ruble, and runaway inflation estimated to be up to 150 percent on basic foodstuffs.

The Kremlin is counting on austerity cuts to help balance its budget, which has revenues coming in at $45 billion lower than earlier projections. The exception, significantly, is defense. With the military exempted from the austerity plan, it begs the question of whether Putin will “play the nationalist card,” such as he did in Crimea, in an effort to strengthen greater Russia during a period of economic weakness.

Georgia On His Mind

We are already seeing this to be the case. As Oilprice.com reported last week, Putin is set to absorb South Ossetia – Georgia’s breakaway republic that declared itself independent in 1990. Under an agreement “intended to legalize South Ossetia’s integration with Russia,” Russia would invest 2.8 million rubles (US$50 million) to “fund the socio-economic development of South Ossetia,” according to Agenda.GE, a Tbilisi-based news site.

The situation is analogous to Crimea because, like Crimea, South Ossetia contains a significant Russian-speaking population with ties to the Motherland.

If Putin succeeds in annexing the tiny province, it will be a real poke in the eye to the United States, which provoked Russia in the early 1990s by promoting construction of a pipeline between the former Soviet republics of Azerbaijan and Georgia. The BTC pipeline moves oil from Baku in Azerbaijan to Tbilisi in Georgia and then onward to Ceyhan on Turkey’s Mediterranean coast.

BTC started operating in 2006. Then, two years later, Putin built his own pipeline to cut out Georgia. The South Ossetia pipeline run by Gazprom stretches 75 kilometers from South Ossetia to Russia.

The current move on South Ossetia is a way for Russia to assert its energy independence in the face of Western sanctions and low oil prices.

It comes as Russia announced plans to divert all of its natural gas crossing Ukraine to a route via Turkey. As Bloomberg reported last week, Gazprom will send 63 billion cubic meters through a proposed link under the Black Sea to Turkey – after the earlier South Stream pipeline, a $45-billion project that would have crossed Bulgaria, was scrapped by Russia amid opposition from the European Union. By sending the gas to Turkey and on to Europe via Greece, Gazprom is in effect sending Europe an ultimatum: build pipelines to European markets, or we will sell the gas to other customers.

According to one observer, the proposed land grab in South Ossetia combined with the snub to Europe by shifting its gas to Turkey and bypassing Ukraine, is a classic Putin power play:

“Russia is preparing to absorb a province of neighboring Georgia, and delivering an ultimatum to Europe that it could lose much of the Russian gas on which it relies,” Steve LeVine writes in Quartz. “Putin has argued that the west is simply intent on ousting him and weakening Russia… Faced with these perceived attempts to undercut him and his country, Putin suggests that he has no choice but to pull around the wagons and stick it out. This could go on a long time.”

Plunging Oil Prices Crash The Stock Market?

When oil crashed in 2008 all hell was breaking loose. Lehman Brothers went up in smoke and stocks were in a nosedive. Oil has once again crashed -50% in only 6 months but equities haven’t followed – at least not yet! Will stocks hold up going forward? You might find it hard to believe just how much wealth could have been created last time this happened. If we learn from the past, this could be a second chance to make an absolute fortune.

Some have speculated that the oil price crash was orchestrated by the Saudis, possibly in collusion with the United States and other Gulf states, to punish Iran, its main political and religious rival in the Middle East.

Whether or not that is true, there is no denying the effects of a low oil price on Iran’s economy. “Iran is already missing tens of billions of dollars in oil revenue due to Western sanctions and years of economic mismanagement under former President Mahmoud Ahmadinejad,” Bloomberg reported on Jan. 7. Like Russia, Iran is looking at spending cuts in next year’s budget, which is based on an overly-optimistic $72 a barrel crude oil price.

However, unlike Russia, which is “circling the wagons” and pulling further away from the West currently, the oil price drop could actually lead to more of a détente between Iran and Western countries. In a speech on Jan. 4, President Hassan Rouhani said Iran’s economy “cannot develop in isolation from the rest of the world,” while at the same time, Iran’s foreign minister was negotiating a nuclear deal that could see the lifting of UN sanctions, the Washington Post observed.

Then there is the cooperation between the West and Iran over the terrorist group ISIS. The National Post’s J.L. Granatsein wrote in a column on Tuesday that Iran has deployed substantial numbers of its Revolutionary Guard elite Al Qods brigade into Iraq and Syria to fight ISIS, along with Western allies including the US, Britain, France and Canada. This is despite Iran’s support for Hezbollah in Lebanon and Syria’s president Assad.

“Politics makes strange bedfellows indeed, but not much can be stranger than this. Led by the Americans, hitherto the Great Satan to the Iranian leaders, the ties between the West and Iran are becoming tighter, each side reacting to the horrors of Islamist fundamentalism throughout the region,” Granatsein writes. “The Iranians have been hurt by sanctions, and they are being wracked even more by the falling price of oil. Easing curbs on trade and Iranian banks may mitigate the effects of the oil price collapse.”

Venezuela Bracing For The Worst

The other major loser in the oil price collapse, Venezuela, may not see such a positive outcome. Wracked by decades of economic mismanagement by Hugo Chávez, the South American oil producer was already struggling to pay its debts when new president Nicolás Maduro came to power.

Now, with inflation running at 60 percent and lines forming outside state grocery stores for food and other basic supplies, Maduro faces the specter of serious social unrest if conditions do not improve. The country has some of the world’s cheapest gasoline prices, but Maduro has refused to end fuel subsidies, fearing, no doubt, a repeat of widespread riots in 1989 that left hundreds dead after gasoline prices were allowed to rise.

Venezuela is even more dependent than Russia on the price of oil, earning some 96 percent of its foreign currency from oil sales, putting Maduro in the untenable position of either borrowing more, despite crushing debts, or slashing spending:

“With only $20 billion left in its reserves, and $50 billion in debt to China alone, Venezuela appears headed toward a choice between abandoning its oil giveaways and defaulting on its debts, or starving its own population to the point of revolt,”according to the Washington Post.

This post originally appeared on OilPrice.com.

Read more from Oilprice.com:

• One Region That Could Benefit Most From Low Oil Prices
  
• The 8 Major Geopolitical Catalysts Of 2015
• New King In Saudi Arabia But Same Old Oil Policy

Angela Merkel appears to be taking a tougher stance against Vladimir Putin

German Chancellor Angela Merkel Wednesday suggested she is prepared for a drawn-out confrontation with Russian President Vladimir Putin over the Ukraine crisis

“We need patience and staying power to overcome the crisis,” Merkel told German lawmakers in a speech to Berlin’s parliament. She added that economic sanctions on Russia “remain unavoidable” as long as government forces continue to battle pro-Russian separatists in eastern Ukraine, Bloomberg reports.

Merkel continued that while the crisis may have been triggered by Russia’s concerns over the impact of Ukraine’s free trade agreement with the European Union, “none of this justifies or excuses Russia’s annexation of Crimea.”

Russia’s actions, she said, interrupt “the peaceful international order and breach international law.”

MORE: Russia wants a “100% guarantee” that Ukraine won’t join NATO

The German chancellor’s speech to parliament follows an address Merkel made in Australia Monday, during which more openly critical of Putin than in the past, suggesting her patience with Putin is running out after months of negotiations. Merkel and Putin met during the G20 conference, but that reportedly did not go well for either leader.

[Bloomberg]

Western celebrities were once willing to make public appearances in Russia. With few exceptions, the stars have stopped coming

Russians are also satisfied with their freedom, military and elections

Amid the conflict in Ukraine and growing discord with European neighbors and Western countries, Vladimir Putin’s approval rating among Russians has climbed to its highest level in years, according to a new Gallup poll.

Eighty-three percent of Russians approve of the job Russia’s president is doing. This ties his top rating in 2008 and marks a 29 percentage point increase from Putin’s rating in 2013.

For the first time since 2008, a majority of Russians say their country’s leadership is moving them in the right direction. In addition, 78% have confidence in their military, 64% in their national government, and 39% say that they are confident in the honesty of Russian elections.

But Russians’ positivity isn’t limited to their government. A record high of 65% of Russians said they were satisfied with their freedom in 2014. A significant group–35 %–also said they thought economic conditions were improving.

While Russians are satisfied with their own government, the poll showed they are increasingly turning away from Western countries. Both U.S. and European Union leadership had single digit approval ratings. One country Russians do approve of is China. The poll showed Russians’ approval for China soared this year to a record 42%. In recent months, the two countries have shown close economic ties, signing a $400 billion gas deal this spring.

The Federal Aviation Administration warned U.S. air carriers not to fly in a region about 200 miles away from where Malaysian crash occurred in Ukraine.

Earlier this year the Federal Aviation Administration banned American air carriers from flying over part of the disputed area between Russia and Ukraine over safety concerns, but the area where Malaysia Airlines Flight 17 crashed on Thursday was not included in this restricted airspace.

The agency warned American aircraft on April 25 against flying over the Crimean peninsula and the surrounding waters after Russia, which had moved to annex the territory, claimed control over that airspace.

“In the FAA’s view, the potential for civil aircraft to receive confusing and conflicting air traffic control instructions from both Ukrainian and Russian ATS providers while operating in the portion of the Simferopol (UKFV) FIR covered by this SFAR is unsafe and presents a potential hazard to civil flight operations in the disputed airspace,” the agency wrote. “In addition, political and military tension between Ukraine and the Russian Federation remains high, and compliance with air traffic control instructions issued by the authorities of one country could result in a civil aircraft being misidentified as a threat and intercepted or otherwise engaged by air defense forces of the other country.”

But the Donetsk region where Flight 17 reportedly crashed is roughly 200 miles northeast from the restricted zone. The map below was included in the FAA advisory.

Early promises of help from Russia go unfulfilled

The rebel commander in eastern Ukraine was sure Russia’s tanks would soon come grinding over the border to his rescue. He even had an idea of what would provoke the invasion—“130 corpses,” he told TIME. “When they see that on Russian TV, they’ll come and help us.”

That was in the middle of April, and since then the body count in eastern Ukraine has far surpassed that figure. Even the commander himself, who went by the nickname Romashka, is now among the dead, having been shot by a Ukrainian sniper in his stronghold of Slavyansk at the beginning of May. No Russian troops ever came to help him.

For the Ukrainian government that has been a saving grace, allowing its army to force the pro-Russian militants into retreat over the weekend, killing scores of them in the process. But for Russian President Vladimir Putin, this turn in the conflict presents a painful dilemma. His pledges of support for the separatists now seem like false promises to the rebel leaders—and to their many supporters in Russia—and they have begun openly accusing Putin of cowardice and betrayal. The patriotic spell that he cast on his electorate with the annexation of Crimea in March now seems to have lifted, and his sky-high approval ratings are now likely to come down to earth.

The change in tone is already evident on Russia’s propaganda channels, which still depict the rebel fighters as heroes and martyrs—but not a part of any Russian war. “No one is talking about sending in troops anymore. That conversation is over,” says Mikhail Leontiev, one of the leading spin doctors on state-controlled TV. “Now the people need to understand that if Russia falls into this military trap, it will be worst of all for the people of eastern Ukraine, even for the fighters among them,” he tells TIME.

The fighters would beg to differ. In endless missives to the Russian leadership over the past few months, they have asked with growing anger and desperation for the Kremlin to send in troops or at least provide them with advanced weaponry. “We don’t have the means to fight so many tanks,” Igor Girkin, the rebel commander in eastern Ukraine who goes by the nom de guerre Igor Strelkov, said in a video appeal to Moscow on June 19. “I’m still hoping that Moscow has enough shame to take some kind of measures.”

But instead of offering much material assistance, Putin’s allies seem to have launched a slander campaign against Girkin and his men, even accusing them of “crying like women” about a lack of firepower before abandoning the rebel stronghold of Slavyansk this weekend. “He gave up the city without any pressure from the Ukrainian side,” Sergei Kurginyan, another prominent Kremlin propagandist, said in a video denunciation of the rebels. “No one was advancing against him.”

This claim seemed out of sync with the fighting on the ground. For days before the rebels fled Slavyansk on July 5 the Ukrainian army had besieged them, bombarding their positions with heavy artillery and cutting off supplies of food, electricity and water. Indeed, in the first week of June, Kurginyan had himself campaigned for Russia to send military contractors to assist Girkin and his men.

But that was before Putin made his sudden turn toward the role of a peacemaker in Ukraine. His reasons were pragmatic. Western sanctions had already broken financial ties—and frozen bank accounts—that Kremlin elites had spent years nurturing. The next round of sanctions would likely have sent Russia’s economy into a recession, putting at risk the state programs and paychecks that feed Putin’s loyal bureaucracy. A full-scale invasion would also risk a military quagmire that would further drain the Russian budget, as Ukraine’s army has mustered a force impressive enough to put up a serious fight. So in late June, Putin asked his legislature to withdraw his permission for the use of military force in Ukraine, and he began calling for peace talks in league with Western mediators.

The rebels were not the only ones to see this as a sign of duplicity. Russian nationalists have begun to turn on him as well, posting diatribes and even music videos that seek to goad Putin into war, juxtaposing his pledges to “defend the Russian world” with images of bombed-out villages and Russian corpses in Ukraine. “We gave them hope,” Alexander Dugin, one of the leading nationalist ideologues in Russia, said during a television appearance last week. “When we said we’re a united Russian civilization, this didn’t just come from a few patriotic forces. It came from the President!”

And it will not be easy for Putin to back away from those promises. A nationwide poll taken at the end of June suggested that 40% of Russians supported military intervention in Ukraine, up from 31% only a month earlier. This segment of society is largely made up of young, poor and undereducated nationalists, as well as elderly people nostalgic for the glory of the Soviet Union, according to Lev Gudkov, the director of the Levada Center, the independent polling agency that conducted those surveys. After the Russian annexation of Crimea, the euphoria among these parts of the electorate helped push Putin’s approval ratings toward record highs of over 80% “The revival of those strong imperialist feelings, playing on the idea of a fallen nation rising up, all of that ensured the sudden upswing in support for Putin,” Gudkov said. “But I don’t think that can last, probably not even past this fall.”

The all-time peak in Putin’s popularity, Gudkov points out, came right after the Russian invasion of Georgia in August 2008, when his approval ratings jumped to 88% before quickly getting dragged down by the effects of the global financial crisis. By the spring of 2009, they were down to 55%—propped up by what Gudkov calls the apathetic mass of civil servants and state dependents who support Putin “because there is not other choice.”

That slump is now likely to recur. The Russian economy is once again stagnating, this time from the effects of the Western sanctions, and there are already signs that consumers are suffering from the resulting slump in the value of the ruble. New car sales, for instance, fell by a remarkable 17% last month, and the estimated cost of developing Crimea—roughly $18 billion—will put further strain on the federal budget. Such bread-and-butter problems are not enough to dissuade the jingoist minority in Russia, and they are certainly not much help to rebels fighting and dying in eastern Ukraine.

But as the last few weeks have shown, Putin is not the Napoleon many of them believed him to be.

It takes a lot of things to run a successful space program, but petulance, anger and impulsiveness are not among them. That's a lesson Vladimir Putin has to learn.

It’s a hard fact of exploratory history that angry people don’t achieve much in space. You have to be patient when you design your rockets, steely-eyed when you launch them and utterly unflappable when you actually get where you’re going.

That stay-poised doctrine was conspicuously at work in the past few days, as two different space projects played out in two different parts of the world with two very different results. On Friday, Russia scrapped the launch of its new Angara rocket—a booster that has been in development since 1994 and has gone pretty much nowhere. Vladimir Putin was personally involved both in overseeing the launch and in authorizing the stand-down—a line of command that would seem awfully strange if it were President Obama on the horn with Cape Canaveral telling the pad engineers what they can launch and when they can launch it.

On Saturday, meantime, NASA successfully tested its Low Density Supersonic Decelerator, a nifty piece of engineering that the space agency admittedly overhyped as a “flying saucer,” but that does kind of look like one and is actually a prototype of a new landing system for spacecraft going to Mars—a place NASA has been visiting with greater and greater frequency of late.

The U.S. and Russia were once the Castor and Pollux of space travel, cosmic twins that dazzled the world with their serial triumphs in the 1960s and ’70s, but they’ve gone in different directions since. America’s manned space program has been frustratingly adrift since the end of the Apollo era, but the shuttles did fly successfully 133 times (and failed disastrously twice) and new crewed spacecraft are in development. The unmanned program, meantime, has been a glorious success, with robot craft ranging across the solar system, to planets, moons, comets and asteroids—and one ship even exiting the solar system altogether.

And Russia? Not so much. The collapse of communism, the loss of Kazakhstan—which put the Baikonaur Cosmodrome, Russia’s Cape Canaveral, in an entirely different country—and hard economic times made space an unaffordable luxury. But now Russia is grimly trying to claw its way back—and the grimness is a problem.

The Angara launch was supposed to take place from the Plesetsk Cosmodrome in northwest Russia, a new installation intended to re-centralize the space program, getting it out of Kazakhstan and back on home soil. It’s of a piece with a range of Russia’s actions lately, which have, much like the Angara, been more fizzle than flight.

Putin’s Crimean land grab seemed bold if larcenous for a moment, but the blowback has been severe and he’s already backing down from further actions, with his ambitions for a renewed Russian empire limited—for the moment at least—to a single Black Sea island with less square mileage than Massachusetts. His long dreamed-of economic union—announced with enormous fanfare in early June and intended to serve as a counterweight to the 28-member EU—turned out to be nothing more than a table for three, shared with Belarus and Kazakhstan. Ukraine initially RSVP’ed yes, but that was one revolution and one Russian invasion ago, and the new government is once again tilting west.

And so it will probably go with Russia in space. The original space race was no less political than anything Russia is doing today, but both the U.S. and the U.S.S.R. were operating from positions of strength, projecting their competing power over a sprawling region of client states and taking the duel to the cosmic high ground. Russia today—with Putin calling the shots on when a booster should be launched and the government issuing petulant threats to quit flying American astronauts to the International Space Station—is acting neither strong nor confident.

It is, instead, joining the long list of states that have dreamed of space but sought to power themselves more with rage than rocket fuel. And consider how far they’ve gotten. North Korea? Pathetic. Iran? Please. China? They’re doing great things now, but that only started when they climbed down from their revolutionary zeal and started focusing on the engineering and physics instead of the ideology and slogans.

Russia may once again become the cosmic pioneer it was—and space fans of good will are rooting for that. With the Cold War over, it matters less whether the first flag on Mars or the next one on the moon is the stars and stripes or the Russian tri-color or even the Chinese stars. As long as a human being is planting it, that will be good enough. So the door is always open, Russia. But please, leave the nasty outside before you come in.

In his first interview as President of Ukraine, Petro Poroshenko tells TIME that he has no choice but to keep Russia at the negotiating table, as no country is prepared to guarantee his country's security from further attack

Ukraine’s new President Petro Poroshenko wants to see Russia punished for what he calls the “tragedy” that befell his country this year. But even as Russia has annexed one region of Ukraine and encouraged a violent rebellion in two others, Ukraine does not have the option of breaking off ties with the Kremlin, Poroshenko told TIME in his first interview since taking office. His government has no choice but to seek “an understanding” with Russia, he says, even if for no other reason than the hard reality of Ukraine’s geography.

“Maybe some Ukrainians would like to have Sweden or Canada for a neighbor, but we have Russia,” he said on Monday inside the Presidential Administration Building in Kiev, fidgeting with a set of rosary beads throughout the interview. “So we can’t talk about a firm sense of security without a dialogue and an understanding with Russia.” That is why Poroshenko spent the first full day of his tenure on Sunday in marathon talks with the Russian ambassador to Ukraine, Mikhail Zurabov. Their positions remain miles apart, at best leaving Poroshenko room for “cautious optimism” for restoring civil relations with Russia, he said.

But whatever progress they will make toward a cease-fire between the Ukrainian military and pro-Russian rebels in the regions of Donetsk and Luhansk, Poroshenko has no intention of making nice with Russian President Vladimir Putin. “To be honest, I’m not very interested in what Citizen Putin thinks of my state,” he said. If the Russian leader doubts Ukraine’s right to exist within its current borders, the best way to convince him otherwise is to build a powerful army and a thriving economy, Poroshenko said. “No one would allow himself to doubt the existence of small countries like Singapore,” the Ukrainian President said, “because when a country is strong, effective, comfortable, monolithic, such doubts would never enter anyone’s minds.”

Achieving that will require support from the West, he told TIME, not least of all the kind of military aid that he has been requesting. “We’re talking about assistance that will be able to stop this aggression” from Russia, he said of his discussions last week and this weekend with U.S. and European leaders. “The help can take all kinds of forms, from intelligence to military technology, from blocking our airspace to enforcing a maritime blockade” in case of attack.

Poroshenko said he discussed these kinds of support last week with U.S. President Barack Obama, and brought it up again with Vice President Joe Biden, who attended Poroshenko’s inauguration on Saturday. But no Western nation has agreed to provide any security guarantees to Ukraine, nor have they made any firm pledges to renew the so-called Budapest Memorandum, the 1994 agreement between the U.S., Russia and the U.K. that was supposed to guarantee Ukraine’s territorial integrity.

With the annexation of Crimea in March, Russia violated that agreement, and Poroshenko has since become convinced that even the U.N. Security Council is no longer capable of preventing conflict between major powers. “When one of the veto-holding members of the U.N. Security Council has in effect become an aggressor, that shows that the old system isn’t working,” he said. This argument came up in his talks with Western leaders last weekend in France, and he said they agreed “without question” about the need for the “global security architecture” to be revised. “The struggle for Crimea is a struggle to prevent such precedents from repeating themselves in the future,” he said. “We can’t allow unpunished aggression.”

But punishing Russia is not an option for Poroshenko at this point. The best he can do is to build a military that can prevent a future Russian attack and, at the same time, stay at the negotiating table with the country he calls an aggressor. His goals are modest. Apart from stopping the bloodshed in eastern Ukraine, he wants Russia to offer a new “model of behavior, a model of guarantees” that would restore a sense of stability. So far, he doesn’t have anything close.

Many people are just not that fond of Russia anymore, according to a BBC survey published this week

Russia under President Vladimir Putin’s iron-fisted rule is losing fans across the world at a precipitous rate, according to a new study commissioned by the BBC World Service from GlobeScan and the Program on International Policy Attitudes (PIPA).

Feelings toward Moscow have increasingly soured in 13 of the 24 countries surveyed in 2014 and are the most negative since the poll was first conducted nine years ago.

“Views of Russia have continued to deteriorate strongly over the past year,” the BBC said in a statement. “In the 20 tracking countries surveyed both in 2013 and 2014, negative ratings have jumped four points to 45%.”

Views of Russia were most unfavorable in Europe, where the proportion of French and Germans holding negative views of the country increased by 6 points to 69% and 67%, respectively. In the U.K., 64% of those polled had negative feelings toward Russia — a 7% increase.

An equal percentage of Americans polled held negative feelings about Russia, representing a 5-point increase in the past year.

Pollsters cited Putin’s increasingly antagonistic behavior on the global stage as the likely stimulant responsible for the increase.

PIPA director Steven Kull said the polling period was one “during which Putin had pressed Ukraine to not move toward the E.U., and when the first riots took place in the streets of Kiev.”

However, at least six of the countries surveyed reported increasingly positive attitudes toward Russia.

China, home to roughly 20% of the global population, holds largely favorable views of its neighbor to the north. Approximately 55% of Chinese surveyed expressed positive perceptions of Russia — an 11-point increase.